The best credit card in Britain
Which card is the best credit card in Britain? It all depends on what you want to use it for.
1) I need to buy things on credit
The most obvious reason to get a credit card is so that you can buy things you can’t afford to pay for immediately. (Note the ‘immediately’ - it’s important!) The longer you have to pay back what you’ve borrowed, and the lower the rate of interest on the card, the better off you’ll be. Bear in mind that you will need to be able to afford to pay around 3% of whatever the outstanding balance is on the card each month, as that is the typical minimum payment that credit card providers force you to make.
There are two market-leading card in this category at the moment: The Tesco Bank Clubcard Credit Card and the Marks & Spencer Credit Card, both of which offer 0% on purchases for 15 months. So take out this card in August and you won’t have to pay any interest on your purchases until November 2012!
2) I'd like to be rewarded for spending on my card
Of course, everyone wants to get rewarded for spending money - but cards which offer this benefit are only suitable for spenders who can afford to pay off their credit cards in full each month. Fail to do this, and the amount you’ll pay in interest on these credit cards will cost you far more than the benefits you receive.
If you are able to pay off your credit card in full each month, then there are two types of cards which would suit you: reward credit cards and cashback credit cards.
You need to choose your reward credit card carefully, because you are only able to spend the rewards you earn at certain shops. Take a look at our best buys to see which one would suit you best.
Alternatively, go for a cashback card which offers you a set rate of cashback, depending on how much you spend. It’s like getting a discount on everything you buy!
Both American Express and Capital One offer market-leading cards in this category, enabling you to earn 5% cashback in the first three months and up to 1.25% after that.
3) I need to get rid of my existing credit card debt
If you’re paying interest on your debt, now is the time to switch to a 0% balance transfer card. Believe it or not, nowadays you can move your debt to one of these cards (the market-leading card Barclaycard Platinum) and you won’t have to pay any interest on that debt for a whopping 24 months. That’s the longest 0% period ever!
And the good news is, because 100% of your payments each month will go towards clearing your debt (instead of mostly clearing the interest on that debt), you’ll be able to pay off your debt much quicker.
Just be aware that you will have to pay a fee of 2.8% of your debt when you shift your balance. And make sure that, in two years’ time, you’ve either paid off your debt in full or are prepared to move your remaining debt to a new 0% card.
If you’re not keen to keep shifting your balance around like this, your next best option for getting rid of your debt is a low APR card. These cards charge a low rate for the lifetime of your debt, so you never need to do another balance transfer or pay another transfer fee. These cards are a good option if you are sure you will need longer than two years to pay off your debts.
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